Stakeholder

“ As an example of the language that is sometimes indulged in, one modern office promises to set apart a portion of its future profits, whether such should amount to thousands or to tens of thousands, to hundreds of thousands or to millions, for the support and future provision of any person in decay who shall have once, for however brief a space of time, held a single share in such company. “To become a shareholder,” says the prospectus, “is as it were to effect at once and for ever a policy of assurance against want.” ”

“ It is not only the right of the company to make such a provision but it is its duty to its bond and stockholders, and, in the case of a public service corporation at least, its plain duty to the public. ”

“ So, when the lender is a director, charged, with others, with the control and management of the affairs of the corporation, representing in this regard the aggregated interest of all the stockholders, his obligation, if he becomes a party to a contract with the company, to candor and fair dealing, is increased in the precise degree that his representative character has given him power and control derived from the confidence reposed in him by the stockholders who appointed him their agent. ”

“ The significance of it comes home, however, only to those who understand the difficulties of successful management of great corporations and who appreciate the multitude of decisions as to policy which must have been, on the whole, soundly made, at least from the point of view of the corporation itself, in order to achieve such a success. ”

“ It can and should require for itself and for the use of all persons interested in the corporation, the fullest and most detailed information, consistent with practical business methods, as to the details of its organization, the powers and restrictions imposed upon its stockholders and as to the property against which stock is to be or has been issued. ”

“ Corporate organization and management should be a department of the exposition. By the elimination of all the unnecessary risk in investments in corporation securities through effective governmental regulation and supervision the people may gain control and reap the large profits of capitalized industry. ”

“ When General Ward had finished reading, he lifted up his glasses and said: "Well, that's it, boys; John has come to his turn of the road. Here's the rest. It says: 'The corporation in question is practically controlled by one man, the man who has placed the information above mentioned in the hands of the government. It is a corporation owning no physical property whatever, and is organized as a rebate hopper, if one may so style it. ”

“ Thus the passage of a century has witnessed a complete revolution in the form of organizing and directing business enterprise.
The corporation, as a form of business organization is immensely superior to individual management and to the partnership.
1. The corporation has perpetual life. In the eyes of the law, it is a person that lives for the term of its charter. Individuals die; partnerships are dissolved; but the corporation with its unbroken existence, possesses a continuity and a permanence that are impossible of attainment under the earlier forms of business organization. ”

“ The responsibility of a corporation to the community, expressed in a sound financial organization and in the relation of its officers to its stockholders, would in no way restrain the usefulness of these industrial agencies, and would make them wholly consistent with extended and equal opportunities in production. Immense wealth has often been acquired in connection with corporations whose usefulness to the public has been thereby restricted and the profits of stockholders disregarded. ”

“ When a number of shareholders combine to constitute themselves a majority, in order to control the corporation as they see fit, they become for all practical purposes the corporation itself, and assume the trust relation occupied by the corporation toward its shareholders. ”

“ They should, of course, provide for as many contingencies as can be foreseen, such as the nature, name and place of business, when the relation is to commence and when to terminate, what capital shall be contributed by each, what the share of each in the profits and losses shall be, what the powers of the partners as between themselves shall be, whether the business shall be continued after the death of one or more of the partners and how it shall be wound up. ”

“ Would the plan of letting the employees generally become part owners of the concern place them in a position to give trouble to the management of the enterprise, and would they not soon demand, as stockholders, the right to a voice in the direction of its affairs and in the shaping of its policy? ”

“ Management, instead of being regarded as the servant of Capital exclusively, ought to be in a position to regard itself, as in fact it is, one of the necessary parties to industry, and as such entitled to a voice in matters which pertain to its administrative functions ”

“ The resources of numberless commercial enterprises are each in this day reckoned in millions, and their products are figured in terms of many millions more, as once thousands represented the spread of even the greatest of industries. But more and more business men are coming to realize that business organization as it affects for [Pg 54] weal or woe thousands who contribute to their success, must be conducted as a trust for the common good, and not merely for selfish exploitation, or for oppression. ”

“ Over against all the ownership rights which do and should accrue to such manager, social responsibilities on the part of the management arise and develop with every stage in the progress of the business. These responsibilities are obligations to coöperators in the business, and to the society more remotely affected by the business. These obligations fix the ethical limits of ownership, and define the duties incumbent on proprietorship. ”

“ The principle upon which the grant of franchises to corporations is supported is that there are business operations important to the community which are beyond the financial strength of the individual, and that by the union of the resources of many persons, may be accomplished and thus the public be benefited. ”

“ Every corporation is composed of four parties: the stockholders, who supply the money with which to build the plant, pay the wages, and operate the business; the directors, whose duty it is to select executive [Pg 50] officers carefully and wisely, plan the larger and more important policies, and generally see to it that the company is prudently administered; the officers, who conduct the current operations; and the employees, who contribute their skill and their work. ”

“ A great corporation, doing an intricate and complicated business all over the world, with thousands of stockholders scattered over the entire country, the great majority, numerically, being very small investors, from among the poor and illiterate. This corporation announces that every shareholder is to have one vote, irrespective of the amount of this holding; that any one has the privilege, whenever he will, of proposing any change in existing methods of doing business, or new regulations, or what he will ”

“ An enterprise carried on by means of a trust may be secure from termination or interruption by the death of owners of beneficial interests and in this respect their interests are distinguished from those of partners and are akin to the interests of members of a corporation. And the trust type of organization facilitates, as does corporate organization, the transfer of beneficial interests without affecting the continuity of the enterprise, and also the introduction of large numbers of participants. ”

“ The typical business corporation of the last century, owned by a small group of individuals, managed by their owners, and limited in size by their personal wealth, is being supplanted by huge concerns in which the lives of tens or hundreds of thousands of employees and the property of tens or hundreds of thousands of investors are subjected, through the corporate mechanism, to the control of a few men. ”

“ Unlike the corporation where for management purposes the owners’ powers are delegated to a controlling board, the essential character of the partnership is that each partner has, regardless of the amount of his investment, an equal right in the direction of its business. As between themselves, for purposes of division of duties and specialization of effort, definite power to exercise control over certain features of the business may be delegated to individual partners. ”

“ We see, then, what this company ought to be, what any corporation ought to be: a concern that is square, and always on the level, with every man doing his part. You do not need to take my word for it, you see from the illustration of the table that the interest of every man is sacrificed when any other principle governs. ”

“ This co-operation, to be effective, requires a genuine partnership, in which the body of stockholders and the body of working men plan together, work together, and share together, with the assistance of government commissions and boards that continually adjust and, if necessary, regulate the processes of production and distribution on a basis of equity, to be determined by a consensus of expert opinion. In such a system there is no radical derangement of existing industry, no destruction of initiative, no expulsion of expert management or confiscation of property. ”

“ But realities have a way of differing from forms, and just as in political affairs it is common to regard the State as a very different thing to the people who compose it, as a sublime entity with a separate existence of its own, so directors are apt to distinguish between the company and the shareholders. It is the company to which they owe allegiance. ”

“ So that the real owners have only an indirect supervision over the affairs of the business. The corporation is given a name and seal and is empowered to act as an individual, may borrow money, own property, sue and be sued. Notwithstanding its somewhat cumbersome machinery the corporation is a favorite form of organization possibly because of its limited liability feature, its close centralized control even though the ownership be spread over large numbers, and the amount of money handled be great. ”

“ Such beneficiaries do not ordinarily, and as mere cestuis que trust, plan a common effort or enter into a combination for the conduct of a business enterprise. Undoubtedly the terms of an association may make the taking or acquiring of shares or interests sufficient to constitute participation, and may leave the management, or even control of the enterprise, to designated persons. ”

“ What form of management should replace the administration of industry by the agents of shareholders? What is most likely to hold it to its main purpose, and to be least at the mercy of predatory interests and functionless supernumeraries, and of the alternations of sullen dissatisfaction and spasmodic revolt which at present distract it? Whatever the system upon which industry is administered, one thing is certain. ”

“ It by no means follows that because the action of a corporation may be beneficial to the public, therefore it is a public corporation. This may be said of all corporations whose objects are the administration of charities. ”

“ In those cases where the scheme of organization gives the promoters the power of selecting the directors who are to represent the company in the proposed purchase, they are bound to select competent and trustworthy persons who will act honestly in the interest of the shareholders. ”

“ His object is profit; and if industry is to become, as employers and workers in the building trade propose, an "organized public service," then its subordination to the shareholder whose object is profit, is, as they clearly see, precisely what must be eliminated. ”

“ It is apparent that the corporation within the limits prescribed by statute has most of the attributes and powers of a person—it can sue and be sued, can hold and pass title to property, real and personal, can carry on business in its own name, is responsible to the extent of its entire property for the payment of its debts, etc.
Growth of the Corporate Form of Organization.—The corporate form of organization is being increasingly utilized for the conduct of business of almost every kind. ”

“ The truth is mightier than the sword, and in conference and co-operation between all the parties interested, not in coercion of the others by any one, lies the only hope of an ultimate solution.
What is Industry? We shall reach no understanding of the problems of industry until we adequately appreciate what industry itself is, and who the parties are that are responsible for the carrying on of industry. ”

“ The efficient administration of these co-operative Corporations being demonstrated by their financial success, makes it unnecessary to dwell upon the details of their intensely developed organization. Existing as they do upon so broad a comprehension of the whole commercial and social structures, it is little wonder that they have proven their value to the community. ”

“ The public service corporation which is administered, not to render service to the public, but to permit stock speculators to reap a harvest, can hardly hope for the same brand of justice, and it is hardly to be expected that such a corporation will welcome publicity. ”

“ That the system succeeded for centuries is evident from the organization of the companies remaining so long in its vitality; but the efficiency of this organization for the maintenance of fair dealing could exist only so long as the companies themselves—their wardens and their other officials, who alone, quisque in suâ arte, were competent to judge what was right and what was wrong—could be trusted, at the same time being interested parties, to give a disinterested judgment. ”